Gaming Policy and Enforcement Branch Annual Report

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1 Gaming Policy and Enforcement Branch Annual Report

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3 Letter of Transmittal I am pleased to submit the 2017/18 Annual Report of the Gaming Policy and Enforcement Branch of the Ministry of Attorney General for delivery to the Legislative Assembly and the citizens of British Columbia. The information in this report reflects the activities of the branch between April 1, 2017, and March 31, The Gaming Policy and Enforcement Branch is responsible for the overall regulation and oversight of British Columbia s gambling sector. This includes all commercial gambling conducted and managed by the British Columbia Lottery Corporation, licensed charitable gambling events, horse racing and the delivery of responsible and problem gambling programs to the citizens of the province. The branch s activities are intended to ensure gambling is conducted safely and with integrity. Honourable David Eby, Q.C. Attorney General Gaming Policy and Enforcement Branch Annual Report 2017/18 iii

4 Accountability Statement Honourable David Eby, Q.C. Attorney General Attorney General: I am pleased to present the 2017/18 Annual Report for the Gaming Policy and Enforcement Branch (GPEB). This report covers the period between April 1, 2017 and March 31, I am accountable for the contents of this document and the basis on which the information has been reported. As mandated under the Gaming Control Act, and within the provisions of the Gaming Control Regulation and the federal Criminal Code of Canada, GPEB is responsible for the overall integrity of gambling and horse racing in the province. GPEB is also responsible for the delivery of responsible and problem gambling programs. I would like to highlight a few of the branch s key achievements in 2017/18. In September 2017, government hired lawyer Dr. Peter German to conduct an independent review of B.C. s anti-money-laundering policies and practices in Lower Mainland casinos. GPEB fully supports the review and has provided information to Dr. German. In December 2017, government received two interim recommendations from Dr. German. BCLC, in collaboration with GPEB, implemented the first of the interim recommendations through new procedures that require service providers to gather detailed information on the source of a player s funds for all transactions of $10,000 or more. This policy has already contributed to a steep decline in suspicious cash transactions in casinos. Work is well underway on the second interim recommendation for government regulators to increase their presence at large, high-volume facilities on the Lower Mainland. This recommendation is expected to be fully implemented early in 2018/19. GPEB is looking forward to implementing government s response to Dr. German s final report recommendations. GPEB joined the Ministry of Attorney General in July 2017 and continued to collaborate with the Ministry of Public Safety and Solicitor General and the RCMP regarding the Joint Illegal Gaming Investigation Team (JIGIT). GPEB continues to contribute 5 fully integrated investigators to the team. In June 2017, JIGIT announced the arrests of nine people in connection with alleged illegal gaming houses and money laundering in B.C. As part of the Responsible Gambling Strategy, GPEB and BCLC collaborated on the transfer of the GameSense Advisor program to BCLC. GPEB is reallocating resources to address existing service gaps through the development of early intervention services, outreach to online players exhibiting problem gambling behaviour, and the expansion of community training programs in Indigenous communities to provide culturally sensitive supports. GPEB also developed an information package for local governments to help inform them about the public health risks of gambling. The new package is intended to help local governments make more informed decisions about gambling facilities. This fulfils a commitment government made in the 2015 Plan for Public Health and Gambling in B.C. John Mazure Assistant Deputy Minister and General Manager Gaming Policy and Enforcement Branch iv Gaming Policy and Enforcement Branch Annual Report 2017/18

5 Contents Letter of Transmittal Accountability Statement iii iv Our Organization 3 Highlights 6 Gambling in British Columbia 7 Integrity of People and Companies Involved in Gambling 8 Corporate Registration 8 Personnel and Lottery Retailer Registration 9 Certification 9 Compliance with Regulations and Standards 11 Investigations 11 Intelligence Unit 12 Reporting Requirements 12 The Audit Program 12 Joint Illegal Gaming Investigation Team 13 Supporting Citizens and Communities 15 Responsible and Problem Gambling Program 15 Plan for Public Health and Gambling in British Columbia 18 Host Local Government (HLG) Payments 18 Destination Assistance Compensation (DAC) 18 Licensing of Gambling Events 18 Gambling Policy, Standards and Regulations 20 Local Government Information Package 20 Unregulated Online Gambling 21 New Games Framework 21 New Policy for Firearms as Prizes 21 Monitoring of Licensed Gaming Online 22 GPEB Operations Support 23 Financial Services 23 Information Technology (IT) Support 23 Gaming Policy and Enforcement Branch Annual Report 2017/18 1

6 Appendix A: Information Tables 24 Table 1: Sources and Distribution of Gambling Revenues 25 Table 2: Corporate, Lottery Retail Registration and Personnel Registration 26 Table 3: Registration Decisions 27 Table 4: Gambling Supplies Certification 28 Table 5: Investigations and Enforcement Actions of Incident Reports Related to Gambling 29 Table 6: Gambling Audits by Category 30 Table 7: British Columbia Horse Racing Summary 31 Table 8: Horse Racing Rulings 32 Table 9: Horse Racing Wagering 33 Table 10: British Columbia Responsible and Problem Gambling Program 34 Table 11: Host Local Government Revenues by Gambling Facility 35 Table 12: Licensed Gambling 36 Table 13: GPEB Budget and Expenditures 37 Appendix B: Gambling Permitted in British Columbia 38 2 Gaming Policy and Enforcement Branch Annual Report 2017/18

7 Our Organization Mandate The Gaming Policy and Enforcement Branch (GPEB) regulates all gambling 1 in B.C. GPEB ensures the integrity of gambling industry companies, people and equipment, and ensures compliance with policies and standards established under the Gaming Control Act ( the Act ) and the Gaming Control Regulation. This includes regulatory oversight of commercial gambling conducted and managed by the British Columbia Lottery Corporation (i.e. lotteries, casinos, community gaming centres, commercial bingo halls and PlayNow.com), B.C. s horse racing industry and licensed charitable gambling events. GPEB also delivers responsible and problem gambling programs. The Act governs how gambling is regulated and operated in B.C. GPEB s purpose is to carry out its responsibilities under the Act. The position of the General Manager and the authorities given to that position are identified in the Act. The General Manager s key responsibilities are to advise the Minister on broad policy, standards and regulatory issues, to manage government s gambling policy and to enforce the Act. GPEB s core objective is to ensure that a comprehensive and responsible gambling regulatory framework is in place. Vision The public has confidence in B.C. s gambling industry. Mission To uphold the overall integrity of gambling by maintaining government s gambling policy, regulating the gambling sector, and providing related support services and community programs that benefit British Columbians. Values Integrity, Courage, Teamwork, Passion, Accountability, Service, Curiosity Core Business Areas GPEB has five divisions to carry out its core business: 1. Licensing, Registration and Certification Division 2. Compliance Division 3. Community Supports Division 4. Strategic Policy and Projects Division 5. Operations Division GPEB also assumed the responsibility of the Compliance and Enforcement Collaborative and Secretariat in November GAMING POLICY AND ENFORCEMENT BRANCH LICENSING, REGISTRATION & CERTIFICATION DIVISION COMPLIANCE DIVISION COMMUNITY SUPPORTS DIVISION STRATEGIC POLICY & PROJECTS DIVISION OPERATIONS DIVISION COMPLIANCE & ENFORCEMENT COLLABORATIVE AND SECRETARIAT 1 The word gaming has become prevalent when referring to the activity of gambling that is used by many official bodies to control the practice. This is true in British Columbia as per the Gaming Control Act. However, since the activity of gambling involves a financial transaction, whereas the activity of gaming not necessarily so, this report uses the term gambling. Exceptions include proper pronouns the Gaming Control Act, Gaming Control Regulation, Community Gaming Centres, Licenced Gaming Online, Community Gaming Grants, Joint Illegal Gaming Investigation Team, Gaming Online Service, and Gaming Account Summary Reports. Gaming Policy and Enforcement Branch Annual Report 2017/18 3

8 Licensing, Registration and Certification Division The Licensing, Registration and Certification Division is responsible for the registration and certification of the gambling industry, and for licensing charitable gambling events. The Registration and Certification Units are responsible for registering companies and individuals involved in gambling, and for certifying gambling supplies and equipment respectively. Their objective is to ensure the integrity of the companies, individuals, supplies and equipment involved in gambling. The Licensing Unit administers the gambling event licence program, which issues gambling event licences to eligible organizations raising funds and dispersing them in an approved manner. Compliance Division The Compliance Division works to ensure regulatory compliance with the Gaming Control Act, Gaming Control Regulation and Criminal Code of Canada. The division conducts inspections and audits of gambling in British Columbia to ensure compliance with legislation, regulation and public interest standards and directives. GPEB staff make inquiries into complaints or violations to determine if there is a need for education or training, a resolution through administrative sanctions or a penalty under the Act. The division conducts both commercial and charitable gambling audits. It also provides assistance to the Ministry of Municipal Affairs and Housing in auditing and investigating the use of grants provided under the Community Gaming Grants program as per the Gaming Control Act. The division s Racing Unit develops and enforces rules and policies for horse racing, regulates horse racing events and registers all racing participants. The division is supported by an intelligence unit that provides government and its policing partners with information and situational awareness on organized crime and illicit activity impacting the integrity of gambling in B.C. Four investigators together with a manager from GPEB s Compliance Division work as part of the Joint Illegal Gaming Investigation Team s (JIGIT) two operational units. JIGIT was formed to investigate organized crime involvement in illegal gambling and proceeds of crime entering B.C. gambling facilities. Community Supports Division The Community Supports Division supports the integrity of gambling in B.C. through the provision of programs and services to support healthy gambling and the protection of public interest in relation to responsible gambling practices. The division administers the Responsible and Problem Gambling Program, which includes delivering culturally responsive responsible gambling education in schools and the community, early intervention and harm reduction services, responsible gambling education and problem gambling support in casinos through GameSense Advisors 2, and free clinical counselling for individuals and families experiencing problem gambling. Strategic Policy and Projects Division The Gaming Control Act requires GPEB to advise the Minister on broad gambling policy, standards and regulatory issues, and under the Minister s direction, to manage the government s gambling policy. The Strategic Policy and Projects Division meets current and future policy needs by anticipating industry changes and pro-actively addressing challenges. This division is responsible for leading strategic policy development and branch communications, and making recommendations for legislation and regulation of gambling activities across B.C. 2 In 2018/19, BCLC became solely responsible for the GameSense Advisor program transfer explained on page Gaming Policy and Enforcement Branch Annual Report 2017/18

9 Operations Division The Operations Division provides financial, administrative, risk management, information technology (IT) services and records management services, including freedom of information request administration, for the Branch. This includes monitoring financial operations and distributing gambling-related funding, such as Host Local Government payments, throughout the province, as well as development and maintenance of a custom IT application that supports Branch operations from licensing to investigations and revenue distribution. The Division also provides facilities management and administration to the five offices throughout the province. Compliance and Enforcement Collaborative and Secretariat The Compliance and Enforcement Collaborative (C&EC) is a cross-government inter-agency working group and community of practice with a mandate to enhance the effectiveness and efficiency of the compliance and enforcement sector within British Columbia. The purpose of the Secretariat is to support compliance and enforcement activities across government by establishing, with the C&EC, longer-term goals and priorities specific to addressing their mandate. GPEB assumed responsibility for the C&EC and Secretariat in November In April 2016, the Ministry of Municipal Affairs and Housing (MAH) assumed responsibility for the program staff and policy for the Community Gaming Grants program. However, GPEB continues to provide financial administration and information technology support services for the program, and retains responsibility for its audit and compliance. 3 3 GPEB no longer includes the table showing the distribution of Community Gaming Grants by sector. This information can be found at the following links: Gaming Policy and Enforcement Branch Annual Report 2017/18 5

10 Highlights In 2017/18, GPEB undertook the following activities: Processed new and renewed registrations for: o 6,637 gambling workers. o 918 lottery retailers. o 255 senior officials and senior employees. o 679 horse racing workers. o 27 gambling services providers. o 13 gambling equipment suppliers. o 10 ancillary service contractors. Completed 27 compliance audits of BCLC and gambling service providers regarding applicable public interest standards, directives, laws and regulations. Conducted 169 audits and inspections of organizations that received Community Gaming Grants and gambling licences. Investigated 1,158 reported incidents related to offences under the Gaming Control Act and the Criminal Code of Canada that resulted in 260 recommended charges, administrative actions or other enforcement measures. Continued the roll-out of the Anti-Money Laundering (AML) initiatives which includes supporting BCLC with the implementation of the first interim recommendation from Dr. German and increasing GPEB presence at large, high-volume facilities on the Lower Mainland in response to the second interim recommendation. Established the Gaming Intelligence Group (GIG), in collaboration with BCLC and the police, to further the goal of reducing suspicious cash being accepted into the gaming industry. Developed and released a new information package for local governments in B.C. to help inform them about the public health risks of gambling and support informed decisions about whether to host a new or expanded gambling facility in their communities. Completed a successful six-month Gam Info Rep (GIR) pilot to establish and assess a mobile earlyintervention service to support at-risk gamblers. Completed an agreement in principle between the three stakeholders (BCLC, GPEB, UBC) regarding funding and broad deliverables. The purpose of the agreement is to provide funding to the UBC Research Centre for gambling research. The specific contractual/agreement framework is currently being finalized. Provided counselling to 1,269 people across the province. Delivered 2,387 prevention presentations on responsible gambling to 86,075 people. Developed and launched new educational online instructional tools for the new Ministry of Education curriculum. Developed online self-help educational tools for those at risk or negatively impacted by gambling. Completed a six-month pilot delivering a trainthe-trainer Narrative Therapy tool to Indigenous communities. Completed 837 gambling supplies certifications. 6 Gaming Policy and Enforcement Branch Annual Report 2017/18

11 Gambling in British Columbia In 2017/18, commercial gambling in the province generated revenue of $3.3 billion. The commercial gambling industry includes PlayNow.com, B.C. s only legal online gambling website, provincial and national lottery games, 17 casinos, 18 community gaming centres, 7 commercial bingo halls, 3 horse racetracks and 19 horse racing teletheatres. 4 Licensed gambling events generated approximately $46.8 million for not-for-profit, charitable and religious organizations in British Columbia. After deducting prize payouts and expenses, commercial gambling returned $1.4 billion in revenue to government. This revenue was used to support local communities, the horse racing industry, responsible and problem gambling treatment programs, provincial health programs 5, other provincial government programs, and GPEB operations: 1. $964.1 million was allocated to the Consolidated Revenue Fund to support provincial government programs and services. 2. $147.2 million was allocated to the Health Special Account. This reflects a commitment that was made by the B.C. government in 1992 to allocate revenue from the B.C. Lottery Corporation specifically for health care initiatives. To fulfil this commitment, the Health Special Account (HSA) was created as a special account within the Consolidated Revenue Fund to be used to finance urgent health care priorities. According to the Health Special Account Act, the annual payment amount is equal to the amount shown in the Estimates as revenue in the HSA for that fiscal year. The account may be used for the administration, operation and delivery of health care, health research, health promotion and health education services. The HSA is considered general revenue to the Ministry of Health and is part of its overall budget. 3. $140.0 million in Community Gaming Grants was allocated to non-profit community groups. 4. $108.8 million was allocated to local governments for the Host Local Government program and the Destination Assistance Compensation program. 5. $11.6 million was provided to the horse racing industry reflecting a government commitment to support it by allocating 25 per cent of slot machine net revenue from the casinos co-located at the Hastings and Fraser Downs racetracks. 6. $19.0 million was allocated to fund GPEB operations ($13.4 million) and Responsible and Problem Gambling programs ($5.6 million). 7. $9.9 million was allocated to the federal government under a revenue-sharing agreement between the federal and provincial governments. 4 Refer to Appendix B, Gambling Permitted in British Columbia 5 Refer to Appendix A, Table 1, Sources and Distribution of Gambling Revenues. Gaming Policy and Enforcement Branch Annual Report 2017/18 7

12 Integrity of People and Companies Involved in Gambling Every year, individuals and companies apply to be registered so that they may work and operate in the commercial gambling industry in B.C. GPEB s goal is to ensure only suitable candidates participate in the gambling industry in this province. Applicants are subject to a background investigation, which includes, but is not limited to, a criminal record check and an overall suitability examination to ensure they meet the required standards of integrity. If successfully registered, individuals and companies continue to be monitored to make sure they adhere to the conditions of registration set out in the Gaming Control Act and Gaming Control Regulation. There are three different types of registration: corporate, personnel and lottery retailers. There is an application fee for each type of registration that partially recovers the costs of investigating each application. In addition, corporate registration involves an annual fee. Corporate Registration GPEB conducts an in-depth investigation of gamblingrelated businesses and their executive personnel to ensure suitability. Businesses registered with GPEB include many large public and privately owned companies, including casino, bingo and horse racing operators, as well as suppliers and manufacturers of gambling services, including online content providers, and gambling equipment (e.g. slot machines, automatic shufflers). GPEB also registers other service providers, such as gambling consultants, raffle services, security and ancillary services, including food and janitorial services provided at gambling facilities. In addition to its normal responsibilities, Corporate Registration completed two notable projects in 2017/18: the relocation of the Edgewater Casino to become the new Parq Vancouver Casino and the introduction of Live- Dealer. Investigative work began on the Edgewater/Parq project in 2014 and culminated in the opening of the new facility in To conduct a thorough due diligence investigation to ensure the integrity of the Edgewater/ Parq project, Corporate Registration investigated 15 companies related to the project, 40 senior officials and senior employees of those companies and reviewed multiple contracts, loan agreements and financial documents. Overall, Corporate Registration invoiced the Edgewater/Parq entities approximately 800 hours of investigator time. Live-Dealer is a new form of gambling in North America that combines elements of both online and land-based play. Although Live-Dealer has been a popular form of gambling in Europe for about 10 years, British Columbia is the first North American jurisdiction to introduce it. Corporate Registration, in partnership with the Certification Unit, had to design specific investigative methods and tools to accommodate a thorough due diligence investigation into this unfamiliar technology. Although the registrant offering Live-Dealer is based in Latvia, Malta and Sweden, the introduction of the product in British Columbia required the creation of a live-dealer studio in British Columbia. Live-Dealer launched successfully in January 2018 and created dozens of local jobs as well as introducing new form of gambling to PlayNow. 8 Gaming Policy and Enforcement Branch Annual Report 2017/18

13 Personnel and Lottery Retailer Registration GPEB registers all workers involved in the commercial gambling industry. This includes all people directly involved in the industry (e.g. casino, bingo, horse racing workers and lottery retailers), as well as those indirectly involved (e.g. BCLC and GPEB employees). 6 Refer to Appendix A, Table 2, Corporate, Lottery Retailer Registration and Personnel Registrations During the fall of 2017, a new agreement was reached with BCLC and GPEB Lotteries Registration Unit (LRU). This new agreement ended the previously accepted practice that allowed a time gap during a transition of a new lottery retail owner. As of October 2017, if the new owner is not registered by GPEB on the actual day of the change of owner, GPEB will immediately notify BCLC to suspend the site location until the new owner and site(s) are registered to sell lottery products. This has been an outstanding process gap since 2007 and one of the high risk priority LRU projects identified to be resolved during 2017/2018. In addition, GPEB collaborated with BCLC to improve the renewal notification process to retailers. The historical seven-day lottery retailer renewal notifications were changed to a 14-day renewal reminder. The notification process changes were implemented to align with the divisional key performance indicators. Every year, GPEB denies a number of applications for a variety of reasons, including providing false information during the investigation, failing to pass a criminal record check, failing to disclose outstanding criminal charges, or not providing information requested in the application or during subsequent background investigation. Through regulatory audits and investigations, registrants are monitored for compliance with the terms and conditions of registration. If the integrity of a registrant is called into question, or if they are found to be noncompliant with the regulatory requirements of the Gaming Control Act or the Gaming Control Regulation, GPEB will take appropriate action to address the concern based on the severity of the transgression. GPEB may issue sanctions, including warning letters, suspensions, fines or cancellation of registration altogether. Refer to Appendix A, Table 3, Registration Decisions Certification Before being able to operate in the live environment, all gambling supplies 7 used in the province must be tested to the applicable requirements set forth in GPEB s technical gambling standards. GPEB establishes and maintains these technical gambling standards to ensure gambling supplies that are used in commercial or charitable environments: operate fairly; are safe and secure; deliver the stated odds of winning; and can be audited. Certification released two updated standards this year 8 in response to changes in technology and changes in the market. Gambling supplies are tested in accredited testing facilities (ATFs), which verify product compliance with GPEB s published technical standards. GPEB then certifies the gambling supplies for use in B.C. s gambling venues. GPEB investigates player complaints and all reports of malfunctioning gambling supplies, including issues with lottery products, internet gambling software and electronic raffle systems. Gambling supplies are routinely upgraded and improved. This means their original certification may no longer be valid. Certification is suspended or revoked when a manufacturer or an ATF reports that a particular gambling product no longer meets GPEB s technical gambling standards. 6 Individuals that operate charitable gambling in B.C. are not registered gambling workers. Instead, GPEB issues charitable gambling licences to eligible organizations. 7 Gambling supplies include slot machines and related casino management systems, lottery products (including pull-tab tickets and Scratch & Win tickets), lottery and self-checking terminals, electronic table game equipment, lottery draw systems, bingo supplies, table game supplies, internet gambling systems and software, and charitable gambling electronic platforms. 8 The two updated standards released in 2017/18 were the Technical Gambling Standard Master Document and the Technical Gambling Standard 1. Gaming Policy and Enforcement Branch Annual Report 2017/18 9

14 A certification may be suspended or revoked for a number of other reasons: a gambling supply malfunctions; an ATF rescinds their certification; or a vendor upgrades the gambling supply and no longer supports the previous version. 9 Software and hardware malfunctions and software bugs and faults all lead to revocations. Gambling supplies for which certification has been suspended or revoked must be removed from the gambling floor, Playnow.com website, or licensed charitable gambling event. Before the gambling supplies can be returned to service, any repairs, modifications or upgrades must be re-tested by an ATF and recertified by GPEB. GPEB s records management system Gaming Online Service (GOS) was updated in January 2018 to automate the generation and distribution of Certificates of Technical Integrity and capture more information about gaming equipment during the certification process. Refer to Appendix A, Table 4, Gambling Supplies Certification 9 A malfunction may include, for example, a situation where a slot machine accepts a counterfeit bill or a scratch ticket manufacturing error that does not allow the player to scratch the latex off the ticket. While not exhaustive, this list captures the most common reasons for a certification revocation. 10 Gaming Policy and Enforcement Branch Annual Report 2017/18

15 Compliance with Regulations and Standards GPEB works to ensure regulatory compliance with the Gaming Control Act, Gaming Control Regulation and Criminal Code of Canada. GPEB achieves this through conducting investigations, inspections and audits of provincial gambling. Additionally, GPEB develops and enforces rules and policies for horse racing in B.C., which include regulating racing events and licensing participants. The Compliance Division has made a significant contribution to the continued roll-out of the Anti-Money Laundering strategy to highlight and communicate the impact of this risk and has worked with other stakeholders to contribute to policy and respond to the interim Dr. German s interim recommendations. Through its ongoing monitoring, analysis and intelligencegathering, the division has contributed to the reduction of suspicious cash that has been accepted into casinos. Investigations To uphold the integrity of gambling in B.C., GPEB investigates reported instances of any conduct, activity or incident occurring in connection with gambling if those incidents involve the potential commission of an offence under the Gaming Control Act or a provision of the Criminal Code of Canada that is relevant to a lottery scheme or horse racing. The primary role of the investigations unit is to investigate provincial gambling offences. It will assist law enforcement agencies in investigating reports of illegal gambling activity. GPEB investigators often work in conjunction with law enforcement agencies to investigate various illegal gambling activities, such as unauthorized lottery schemes, illegal gambling houses, loan sharking and money laundering. They also provide in-depth gambling expertise to law enforcement agencies throughout the province. With the support of law enforcement, GPEB investigates and may recommend for prosecution appropriate charges related to gambling offences as defined in the Criminal Code of Canada. Under the Gaming Control Act, GPEB has the authority to recommend charges for prosecution, issue tickets and warnings and/or recommend administrative sanctions. GPEB investigators and directors have completed outreach presentations to law enforcement agencies outlining the GPEB mandate and highlighting the 2017 memorandum of understanding (MOU) between GPEB and the RCMP. The purpose of the MOU is to ensure the mutual sharing of all significant and required information for each organization to carry out its respective duties relating to Gaming Control Act offences, Criminal Code of Canada offences associated with lottery schemes, and any other matter that may affect the integrity of gambling. The Lower Mainland region is in the process of hiring gaming investigators to address Dr. German s interim recommendations for an increased presence at Lower Mainland casinos. GPEB also provided support to BCLC in the development of a source of funds questionnaire and GPEB s auditors have scheduled an audit of the new process in the first quarter of 2018/19 fiscal year. This initiative will serve to reduce suspicious cash accepted in casinos. The investigations unit operates under a risk-based regulatory enforcement model guided through defined objectives in the annual business plan and by working collaboratively with BCLC. While emphasizing social responsibility, public safety and voluntary regulatory compliance, investigators focus on matters which help to safeguard the industry. In 2017/2018, investigators conducted investigations into occurrences of cheating at play, unlicensed gambling, chip passing, theft and Gaming Policy and Enforcement Branch Annual Report 2017/18 11

16 breach of the terms and conditions of registration, as well as supporting the government s AML strategy. There continues to be a substantial number of well-organized illegal raffles offered on social media throughout the province, most notably in the Chase the Ace format. GPEB investigators have engaged BCLC, along with law enforcement partners, to develop a working group identified as the Gambling Intelligence Group (GIG). The purpose of GIG is to continue to reduce the amount of suspicious cash being accepted into the gaming industry by developing solutions to address areas of concern identified through information sharing and open communication amongst partnered stakeholders. Monthly meetings are held, with all stakeholders present, and issues of mutual concern are addressed to develop best practices. Intelligence Unit GPEB s Intelligence Unit is a member of the association of Law Enforcement Intelligence Units (LEIU) which is an international group comprised of police agencies at the federal, provincial/state, local and tribal levels. GPEB s Intelligence Unit is a recognized entity within the National Gambling Intelligence Sharing Group (NGISG) and is a member of the Regional Intelligence Group 10. It has also established intelligence relationships with several other regulatory and compliance organizations that have similar threats to their industry. The mandate of the Intelligence Unit is to provide timely and accurate intelligence products to gaming stakeholders and decision-makers with a mission to enhance situational awareness of any threats to the integrity of gambling in the operational environment or Area of Responsibility (AOR) defined as the Province of B.C. GPEB Intelligence Unit also identifies threats and provides information to law enforcement in accordance with information-sharing agreements and memorandums of understanding in accordance with privacy policy and disclosure. Over the course of 2017, GPEB Intelligence provided numerous products in the form of documents, informal and formal briefings, and intelligence advice on a variety of topics including the presence of transnational organized crime in the gambling industry in B.C. Another noteworthy event was a presentation to the National Gaming Intelligence Sharing Group (NGSIG) in Cleveland, Ohio, on the Transnational Organized Crime and the Nexus in the gaming industry in B.C. The Unit continues to network with national and international law enforcement partners and regularly attends monthly meetings. The nature of these visits was to promote awareness of common threats and enhance the understanding of threats that impact the Lower Mainland with a nexus to gambling. Reporting Requirements All registrants and licensees must notify the General Manager immediately about any conduct, activity or incident occurring in connection with a lottery scheme or horse racing if the conduct, activity or incident involves or involved the potential commission of an offence under a provision of the Criminal Code of Canada that is relevant to a lottery scheme or horse racing, or the commission of an offence under the Gaming Control Act. In addition, under the Gaming Control Regulation registrants must immediately report any conduct or activity at or near a gambling facility that is or may be contrary to the Criminal Code of Canada, the Gaming Control Act or any regulation under the Gaming Control Act. GPEB works in partnership with BCLC and the police of jurisdiction on matters that impact the overall integrity of gambling. Refer to Appendix A, Table 5, Investigations and Enforcement Actions of Incident Reports Related to Gambling 10 The Regional Intelligence Group is a group of agencies from the Pacific Northwest that includes the Royal Canadian Mounted Police, Vancouver Police Department, Department of Homeland Security (USA), Federal Bureau of Investigation (FBI) and other local police departments on both sides of the border. 12 Gaming Policy and Enforcement Branch Annual Report 2017/18

17 The Audit Program The goal of the audit program is to ensure regulatory compliance with the Gaming Control Act, Gaming Control Regulation, policies, directives and public interest standards to help maintain public confidence in gambling in B.C. GPEB inspects and audits BCLC, gambling facilities, lottery retailers and recipients of Community Gaming Grants and Gambling Event Licences. The program also promotes voluntary compliance with provincial gambling legislation through compliance enhancement education sessions for eligible organizations that conduct licensed gambling or receive gaming grants. The program develops an annual audit plan that outlines the five main areas that are audited: 1. BCLC s overall conduct and management of all forms of gambling, including the corporation s PlayNow.com website and AML procedures; 2. BCLC s conduct and management of lottery gambling; 3. BCLC s conduct and management of commercial gambling facilities (casinos, community gaming centres and bingo halls); 4. Horse racing; and 5. Licensed gambling and community gaming grants. The audit program uses a risk-based approach which focuses audit resources on those areas of greatest risk. This approach has resulted in a dynamic audit plan responsive to emerging and changing risk. This year, fewer compliance audits of the commercial and charitable sectors were conducted, and those resources were allocated to other projects in GPEB, including support of the government s Anti-Money Laundering Strategy, financial integrity reviews of corporate registrants, and Licensed Gaming Online (LGO). Crosstraining of auditors continued so that they can perform audits in both the commercial and charitable gambling sectors. This gives GPEB the ability to allocate audit resources to the areas of greatest risk within the branch. In 2017/18, the GPEB audit team completed 249 audits and file reviews. This comprised of 17 audits of gambling facilities, 10 audits related to commercial and lottery gambling, 53 financial integrity reviews, 108 audits of gaming grant recipients, and 61 licence audits. Of the 169 audits of gaming grant recipients and gambling event licensees, 57 were registered as special projects or complaints from the public, and of the 112 that were assessed for compliance, 34 were fully compliant, 51 were moderately non-compliant, and 27 were severely non-compliant. 11 The audit team continues to work with GPEB s Corporate Registration Unit to conduct reviews on the financial integrity of corporate registrants. The primary focus is to review corporate registrants financial information to identify potential risks and the viability of the organization. This year the audit team completed 53 financial integrity reviews of corporate registrants in the gambling industry. This partnership reflects the branch s risk-based audit approach and utilization of staff skill sets. Refer to Appendix A, Table 6, Gambling Audits by Category Joint Illegal Gaming Investigation Team In 2016, the government of British Columbia and the Province s anti-gang agency, the Combined Forces Special Enforcement Unit BC (CFSEU-BC), announced the joining of forces to form a co-ordinated investigation unit designed to crack down on illegal gambling and money laundering inside and outside B.C. s gambling facilities. The team is located within CFSEU-BC, the largest integrated joint forces police unit in Canada. The primary focus of the new Joint Illegal Gaming Investigation Team (JIGIT) is to disrupt organized crime and gang involvement in illegal gambling and to prevent criminals from using B.C. gambling facilities to legalize the proceeds of crime. The joint team also works to raise public awareness of the role service providers play in identifying and reporting illegal gambling and financial transactions. 11 Under a risk-based approach, GPEB targets higher-risk organizations for non-compliance. Therefore, reported compliance rates will be lower than rates that would result from a random sample of all organizations. Moderately non-compliant is defined as findings that the recipient organization must address. For example, an organization fails to submit required reporting documentation to GPEB. Severely non-compliant is defined as findings that may require immediate action from recipient organizations. For example, an organization may have misused funds. Gaming Policy and Enforcement Branch Annual Report 2017/18 13

18 The four GPEB investigators, together with a manager at JIGIT, continue to provide in-depth gambling expertise to JIGIT and other law enforcement agencies throughout the province. With the support of law enforcement, GPEB/JIGIT assists investigations and may recommend for prosecution appropriate charges related to gambling offences as defined in the Criminal Code of Canada and under the Gaming Control Act. GPEB investigators embedded with JIGIT continue to contribute to ongoing, high-level investigations that are reported through the protocols established upon forming JIGIT. Currently, GPEB is engaged with the second team and advancing investigations that have come to JIGIT s attention. Horse Racing GPEB s racing unit regulates horse racing events in B.C. to ensure compliance with the Gaming Control Act. The racing unit is also responsible for developing policies and rules to ensure horse racing is conducted fairly and with integrity. In particular, the unit establishes the Rules of Thoroughbred and Standardbred Horse Racing. As required, the unit reviews and revises the rules and meets regularly with industry stakeholders to address issues. The unit applies horse racing industry best practices and has an established approach to regular review and continuous improvement. GPEB is responsible for enforcing and adjudicating the rules and regulations related to racing. GPEB reviews activities on the track or in the backstretch that could have a negative impact on the integrity of horse racing. The racing unit is also integral to ensuring the industry operates with safety and integrity as its priorities. In 2017, GPEB s stewards and judges issued a total of 104 rulings: 21 were for thoroughbred racing infractions (issued by stewards), and 83 were for standardbred racing infractions (issued by judges). The penalties issued by judges and stewards range from temporary suspensions to monetary penalties or cancellation of their registration. Refer to Appendix A, Table 8, Horse Racing Rulings In 2017/2018, GPEB also registered 19 teletheatre sites in B.C. that present simulcast satellite broadcasts of horse races run at local, national and international tracks. Refer to Appendix A, Table 9, Horse Race Wagering Horse Racing Betting Fees Horse race betting fees are levies on bets made at horse racing events that are collected by GPEB through Hastings Racecourse, Fraser Downs Racetrack, Desert Park and Horse Racing Teletheatre B.C. (4.5 per cent on triactor bets 12 and 2.5 per cent on other bets). Any balance in excess of annual regulatory fees (equal to the cost of regulating the horse racing sector) is remitted back to the horse racing industry. At fiscal year end, the cumulative total of monthly fees is transferred into the Consolidated Revenue Fund. In 2017/18, the province collected $4.2 million in betting fees, retained $1.9 million to offset the cost of regulating the industry and returned $2.3 million to the industry. B.C. s horse racing industry employs approximately 2,350 licensed owners, jockeys, drivers, trainers, grooms and exercise riders, all of whom must be licensed and registered with GPEB. In 2017/2018, 724 horse race workers were either licensed for the first time or had their licences renewed. Refer to Appendix A, Table 7, British Columbia Horse Racing Summary 12 In a triactor bet, the better picks three horses to finish first, second and third, in exact order. 14 Gaming Policy and Enforcement Branch Annual Report 2017/18

19 Supporting Citizens and Communities The Gaming Policy and Enforcement Branch supports communities in B.C. by delivering problem gambling prevention, public awareness and treatment support services, administering Host Local Government payments, distributing Destination Assistance Compensation and licensing gambling events for community fundraising groups. Responsible and Problem Gambling Program Strategy The Responsible and Problem Gambling (RPG) Program minimizes harm and promotes responsible gambling practices in communities through B.C. s Responsible Gambling Strategy. Refer to Appendix A, Table 10, British Columbia Responsible and Problem Gambling Program British Columbia launched its first Responsible Gambling Strategy in 2003, and this strategy is updated every three years. The strategy s core goals are: Deliver gambling in a manner that encourages responsible gambling and informed choice; Create public awareness of risks associated with gambling; and, Provide treatment and support to those impacted by problem gambling. Responsible Gambling Standards In supporting this strategy, the Province issues responsible gambling standards for the B.C. gambling industry to ensure that: minors are prevented from participating in gambling activities; patrons are equipped to make informed decisions regarding gambling; gambling-related risks are minimized; and people affected by excessive gambling have access to timely and effective information and help. These standards apply to BCLC, gambling service providers, commercial gambling facilities and community organizations licensed to conduct charitable gambling events. Advertising of BCLC, licensee and service provider gambling events is subject to audit by GPEB to ensure compliance with public interest standards that includes responsible gambling standards, and advertising and marketing standards. Compliance audits focus on five key areas: Informed choice ensuring proper use of the Know your limit, play within it tagline, an appropriate level of responsible gambling messaging, and availability of rules of play and information regarding the odds of winning; Appropriate response ensuring gambling workers have received Appropriate Response Training; Responsible practices ensuring clocks and responsible gambling material are placed in highly visible and appropriate areas; Financial transactions ensuring information describing payout policies and stating that credit will not be extended is prominently displayed; and Voluntary Self-Exclusion Program ensuring program is fully operational, including making sure that program information is readily available and gambling facilities are effectively monitoring for excluded individuals. Gaming Policy and Enforcement Branch Annual Report 2017/18 15

20 Services and Supports The goals of the strategy and regulatory standards guide the delivery of service in three areas: responsible and problem gambling awareness and education, early intervention and problem gambling counselling. 2017/18 Responsible and Problem Gambling Program Activities Summary Counselling Services Outreach and Early Intervention Services Day Treatment participants Prevention and Community Engagement Services Indigenous Services Projects 1,269 clients served 343 clients served 163 clients served 86,075 audience participants at 2,387 presentations 3 Narrative Therapy workshops The Responsible and Problem Gambling Program has a number of initiatives underway that extend beyond the 2017/18 fiscal year. These include: the development of specialized rural and remote training teams to extend support options to communities, with a focus on Indigenous communities; a longitudinal assessment and evaluation of current problem gambling treatment programs in B.C. (currently in the final year); expanding Gambling Awareness Week to take place in 20 communities; an Indigenous film project to explore and document traditional approaches to wellness; the expansion of early intervention offerings in communities (GIRs). Deliver Gambling in a Manner that Encourages Responsible Gambling and Informed Choice GPEB administers several programs to ensure the gambling industry operates in accordance with the Province s responsible gambling policies and practices. GameSense Information Centres GameSense Advisors present responsible gambling information at GameSense Information Centres in every casino in B.C. A total of 21 GameSense Advisors share responsible gambling information and practices with interested patrons and direct anyone experiencing gambling-related distress to the Responsible and Problem Gambling Program and/or to BCLC s Voluntary Self-Exclusion Program. 13 Casinos and community gambling centres also feature touch-screen interactive terminals, which provide education modules at the push of a button or the touch of a screen. In 2017/18, GameSense Advisors had 48,587 meaningful interactions that were made through the GameSense program. GameSense Advisors are under contract to GPEB. The advisors and the information centres are co-managed by GPEB and BCLC. GameSense Advisor Transfer In 2016, the Responsible Gambling Council (RGC) released a study examining the co-management structure of the GameSense Advisor (GSA) program. The final report s primary recommendation was to end the joint GPEB-BCLC management of the GSA and to transfer responsibility of the program to BCLC. Subsequent evaluation of the recommendation by GPEB and BCLC led to the approval of the transfer of the program to BCLC in October As of April 1, 2018, the GSA program will be operated and fully funded by BCLC. It is expected that BCLC will expand the program to include all community gaming centres by September The Voluntary Self-Exclusion Program is a BCLC program that allows individuals to exclude themselves from gambling activities in order to help them control their gambling behaviour. At the time of enrollment, individuals can choose the time period of their exclusion, ranging from six months to three years, and they can choose the type of gambling activities for their exclusions, including facilities with slot machines, commercial bingo halls, or PlayNow.com. They are also ineligible to be paid for any jackpot prize they may win while enrolled in the program. At the time of enrollment, BCLC provides materials to help individuals access resources to support them in addressing their gambling problem. 16 Gaming Policy and Enforcement Branch Annual Report 2017/18